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The Basic Components of a Comprehensive Estate Plan

Although historically estate planning mainly consisted of handling property distributions after your death, that only illustrates part of what a thorough estate plan accomplishes. Having an estate plan ensures that wishes regarding your end of life care and property distributions are known. Essentially an estate plan is a road map for your loved ones that expresses your final wishes.

Asset distribution

A will, the most common document in an estate plan, outlines what you want to happen to your property after your death. In a will you can name people you wish to give assets to and even put conditions or requirements that need to be met before the assets are distributed. For parents, a will can be used to name guardians for your child. Increasingly, people are using their wills to provide for their furry family members. A will also names an executor to handle the duties of closing out your estate.

An advanced medical directive

A healthcare directive names a person to make medical decisions on your behalf in the event you become incapacitated or unable to communicate. A healthcare directive also details how you should be care for in the event of a medical emergency, outlining what life saving procedures you want administered.

Power of attorney

A power of attorney document names a person to make financial decisions on your behalf. In the event you cannot make financial decisions, this person can pay your bills, handle your taxes and manage your finances. Having a power of attorney designated can also prevent the need for guardianship if you become incapacitated.

Transferring assets to a trust

Having a trust in place can help to avoid probate and preserve the privacy of the estate. Often a trustee is appointed to manage the trust and distribute assets. A revocable trust is created during your lifetime to hold your assets, but the assets can be transferred back to you. Once you pass away the trust becomes irrevocable. In an irrevocable trust the assets cannot be transferred back and the grantor is no longer considered to own them. One of the benefits of an irrevocable trust is that assets are generally protected from nursing homes.

A comprehensive estate plan is beneficial to you and your loved ones, alleviating their need to make life altering decisions on your behalf without any sort of direction. When power of attorney and health care directive documents are in place, the individuals you designated will be able to step in and handle your affairs if you are unable. If you do not create an estate plan, the State of Illinois will determine what happens to assets you spent a lifetime acquiring.

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